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Topics: Business strategy and the role of IT, Enterprise Architecture, Information Technology trends, Cool technologies.

Friday, March 30, 2012

Measuring Benefits of Enterprise Architecture

Hurdle #2: Measuring benefits of EA

I was speaking to the Chief Information Officer of a large
organization. He recognized the
importance of Enterprise Architecture, but one core question he had was what
are the benefits of doing EA and how these benefits can be measured.

This is a key question facing many organizations, especially
those who are just starting on their EA journey and need to justify investments
into additional EA resources.

The book “Enterprise as Strategy” identified five areas
where EA benefits are evident: “IT costs, IT responsiveness, risk management,
managerial satisfaction, and strategic business outcomes”.[i] United States’ Government Accountability
Office (GAO)’s 2002 survey of government agencies yielded similar findings:
Lower costs, enhanced productivity, improved management and greater
interoperability.[ii] Is it not sufficient to simply measure for
these benefits?

The challenge is that these benefits often cut across
departments and business units in an organization; individual departments might
take credit for those benefits. For
example, EA might have resulted in greater clarity into an organization’s
processes, allowing a department to more easily streamline its own processes. The department can take credit for its
improved effectiveness and the benefits of EA would go unaccounted for.

Secondly, some EA benefits take more time to show. “Enterprise as Strategy” described EA as building
an organization's “foundation for execution”; rightfully, a good foundation
will only show its worth when the storms set in, which does not always happen
immediately. As such, organizations
looking for immediate results might give up on their EA efforts before their
efforts can deliver benefits. However, I
believe there are ways to structure EA efforts such that they deliver both
short term and long term benefits.
"Enterprise as Strategy" shares the same viewpoint,
encouraging organizations to build their EA one piece at a time, instead of
doing a big-bang tear down and rebuild which is both risky and costly. This requires a conscious embedding of EA
efforts into existing projects.

Thirdly, some EA benefits are less tangible, for example
greater clarity, coherence within the organization or more knowledge
sharing. In one of my past EA exercises,
my colleagues and I were creating the future state of an enterprise, and as
part of that work we interviewed many stakeholders of the enterprise. What we realized was the interview process
gave people a sense of involvement in the transformation exercise, and that
helped to make the later implementation of change easier.

Lastly, there might not be a one-size-fits-all benefits
metric. The reason is EA is about facilitating
the design of an organization, so the success of EA is how well it helps move
the organization towards that design. If
the design is for the organization to be more profitable, then measure
profitability. If the design is for
greater customer satisfaction, then measure that. It does not make sense to measure
profitability when the organization is designing for greater customer
satisfaction.

Possible Solution

A good approach to measuring benefits of EA is to
incorporate the identified benefit areas into a balanced scorecard, similar to
the one described in Nick Malik’s article “How do you measure Enterprise Architecture?”[iii]. Nick proposed including not only profitability
or cost savings on the scorecard, but also other aspects such as feedback from
various business units on their view of EA, and the number of EA deliverables
produced. This approach helps to provide
a more holistic view on the impact of EA in the organization. Via Nova Architectura’s paper “A balanced
scorecard approach to measure the value of enterprise architecture” provides
further suggestions on how the scorecard can look like[iv].

Separately, PwC principals Chris Curran and
David Baker suggested a few EA quick wins that will help organizations deliver
EA’s value early[v]. Their suggestions include embedding
Enterprise Architects into projects to help those projects succeed and focusing
EA on a high priority business domain or a core IT capability.

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About Me

I am an IT consultant with over ten years of experience in IT, including my recent stint as senior architect for Singapore's National Electronic Health Record project. I have worked on IT in a variety of settings, including research lab, startup, multi-national software company and government. I have been an IT enthusiast from young, and is passionate about seeing information technology make a deep impact in people's lives and organisations. Currently, I am a Systems Design and Management fellow at Massachusetts Institute of Technology studying how organisations can better leverage IT.